Silicon Metal from the Republic of Kazakhstan

C-834-811 Investigation Public Document E&C/OV: JMN

November 27, 2020

MEMORANDUM TO: Jeffrey I. Kessler Assistant Secretary for Enforcement and Compliance

FROM: James Maeder Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations

SUBJECT: Decision Memorandum for the Preliminary Determination of the Countervailing Duty Investigation of Silicon Metal from the Republic of Kazakhstan

I. SUMMARY

The Department of Commerce (Commerce) preliminarily determines that countervailable subsidies are being provided to producers and exporters of silicon metal from the Republic of Kazakhstan (Kazakhstan), as provided in section 703 of the Tariff Act of 1930, as amended (the Act). The period of investigation (POI) is January 1, 2019 through December 31, 2019.

II. BACKGROUND

On June 30, 2020, Commerce received a countervailing duty (CVD) petition concerning imports of silicon metal from Kazakhstan in proper form, on behalf of Globe Specialty Metals, Inc. and Mississippi Silicon LLC (the petitioners).1 The CVD petition was accompanied by antidumping duty (AD) petitions on Bosnia and Herzegovina, Iceland, and Malaysia. On July 10, 2020, we obtained and placed on the record U.S. Customs and Border Protection (CBP) data for entries of silicon metal from Kazakhstan under the Harmonized Tariff Schedule of the United States subheadings 2804.69.1000 and 2804.69.5000 during the POI.2 On July 13, 2020, Commerce held consultations with officials from the Government of Kazakhstan (GOK).3

1 See Petitioners’ Letter, “Petitions for the Imposition of Antidumping and Countervailing Duties: Silicon Metal from Bosnia and Herzegovina, Iceland, the Republic of Kazakhstan, and Malaysia,” dated June 30, 2020 (Petition). 2 See Memorandum, “Petition for the Imposition of Countervailing Duties on Imports of Silicon Metal from Kazakhstan: Release of Entry Data,” dated July 10, 2020. 3 See Memorandum, “Consultations with Officials from the Government of the Republic of Kazakhstan,” dated July 13, 2020.

On July 20, 2020, Commerce initiated its CVD investigation on silicon metal from Kazakhstan.4 The initial allegations and supplements to the Petition are described in the CVD Initiation Checklist.5 In the Initiation Notice, we stated that, because the CBP data did not indicate a large number of producers/exporters of silicon metal during the POI, we would calculate company-specific subsidy rates for each publicly-identifiable company included in the CBP data.6 We therefore selected, as mandatory respondents in this investigation, JSC NMC Tau-Ken Samruk (TKS) and Tau-Ken Temir LLP (TKT).7

On July 8, 2020, Commerce issued its Initial Questionnaire to the GOK and requested that the GOK forward the questionnaire to TKS and TKT.8 TKS and TKT submitted a combined response to the affiliation section of the Initial Questionnaire on August 6, 2020,9 and provided responses to the subsequent supplemental affiliation questionnaires in August10 and September 2020.11

On September 1, 2020, Commerce postponed the deadline for the preliminary determination of the investigation to the full 130 days permitted under section 703(c)(1)(A) of the Act and 19 CFR 351.205(b)(2), making the current due date for this preliminary determination November 27, 2020.12

The GOK submitted its response to the Initial Questionnaire on September 11, 2020.13 TKS/TKT’s response to the remainder of the Initial Questionnaire was due on September 15, 2020, but it did not submit it until September 16, 2020. For this reason, Commerce rejected TKS/TKT’s submission as untimely on October 1, 2020.14 On September 25, 2020, TKS/TKT timely submitted the remainder of its response to the Initial Questionnaire for its affiliate,

4 See Silicon Metal from the Republic of Kazakhstan: Initiation of Countervailing Duty Investigation, 85 FR 45173 (July 27, 2020) (Initiation Notice). 5 See “Silicon Metal from the Republic of Kazakhstan,” dated July 20, 2020 (CVD Initiation Checklist). 6 See Initiation Notice, 85 FR at 45175-76. 7 Id., 85 FR at 45176. 8 See Commerce’s Letter, “Investigation of Silicon Metal from the Republic of Kazakhstan: Countervailing Duty Questionnaire,” dated July 23, 2020 (Initial Questionnaire). 9 See TKT’s Letter, “Silicon Metal from Kazakhstan,” dated August 6, 2020 (Affiliation Response). The Affiliation Response indicated that TKT was wholly-owned by TKS, and that the companies are, therefore, cross-owned. As a result, we hereinafter refer to these entities as TKS/TKT. 10 See TKT’s Letter, “Silicon Metal from Kazakhstan,” dated August 18, 2020 (Affiliation Supplemental Response). 11 See TKT’s Letter, “Silicon Metal from Kazakhstan,” dated September 8, 2020 (Affiliation Second Supplemental Response). 12 See Silicon Metal from the Republic of Kazakhstan: Postponement of Preliminary Determination in the Countervailing Duty Investigation, 85 FR 55412 (September 8, 2020). 13 See GOK’s Letter, “Countervailing Duty Questionnaire Response,” dated September 8, 2020 (GOK Initial Questionnaire Response). We note that the GOK initially attempted to file its response on September 8, 2020. We provided the GOK an extension to submit its full response by September 14, 2020. 14 See Commerce’s Letter, “Countervailing Duty Investigation of Silicon Metal from the Republic of Kazakhstan: Rejection and Removal of Submission from the Record,” dated October 1, 2020 (Rejection Letter); see also Memorandum, “Rejection of Untimely Filed Response,” dated October 1, 2020 (Rejection Memorandum).

2 Metallurgical Combine KazSilicon LLP (KazSilicon).15 From August through October, the petitioners commented on questionnaire responses submitted by the GOK and TKS/TKT.16

In October 2020, TKS/TKT requested that Commerce terminate the instant investigation due to the petitioners allegedly interfering with the response process,17 or, alternatively, accept its rejected questionnaire response,18 and it also filed Commerce memoranda supporting its position that Commerce should reconsider its rejection of TKS/TKT’s response.19 In November 2020, Commerce responded to TKS/TKT’s submissions, stating that it would not terminate the investigation as requested, not accept TKS/TKT’s untimely questionnaire response, nor reconsider the petitioners’ request to disqualify TKS/TKT’s counsel, as discussed above.20

Also in November 2020, the petitioner and TKS/TKT submitted comments for consideration in the preliminary determination.21 On November 17, 2020, the GOK submitted its response to a supplemental questionnaire issued by Commerce.22

III. SCOPE OF THE INVESTIGATION

The product covered by this investigation is silicon metal from Kazakhstan. For a full description of the scope of the investigation, see the accompanying preliminary determination Federal Register notice at Appendix I.

15 See TKS/TKT’s Letter, “Silicon Metal from Kazakhstan,” dated September 25, 2020 (KazSilicon Questionnaire Response). 16 See Petitioners’ Letter, “Silicon Metal from Kazakhstan: Deficiency Comments on Tau-Ken Temir LLP’s Affiliation Questionnaire Response,” dated August 17, 2020; Petitioners’ Letter, “Silicon Metal from Kazakhstan: Petitioners’ Comments on and Rebuttal, Clarifying, and Correcting Factual Information to the Government of Kazakhstan’s Initial Questionnaire Response,” dated October 2, 2020; and Petitioners’ Letter, “Silicon Metal from Kazakhstan: Petitioners’ Comments on the KazSilicon Questionnaire Response,” dated October 13, 2020. 17 On September 8, 2020 the petitioners requested that TKS/TKT’s counsel be disqualified from representing TKS/TKT in this investigation. See the Petitioners’ Letter, “Silicon Metal from Kazakhstan: Request to Disqualify Squire Patton Boggs (US) LLP as Counsel to Tau-Ken Temir LLP,” dated September 8, 2020. However, on October 6, 2020, Commerce found no basis to disqualify TKT’s counsel in this investigation. See Memorandum, “Silicon Metal from the Republic of Kazakhstan: Representation of Tau-Ken Temir LLP by Squire Patton Boggs,” dated October 6, 2020. 18 See TKS/TKT’s Letter, “Silicon Metal from Kazakhstan,” dated October 2, 2020; TKS/TKT’s Letter, “Silicon Metal from Kazakhstan,” dated October 5, 2020; and TKS/TKT’s Letter, “Silicon Metal from Kazakhstan,” dated October 13, 2020. 19 See TKS/TKT’s Letter, “Silicon Metal from Kazakhstan,” dated October 28, 2020 (containing memoranda detailing instances where Commerce allowed respondents to submit missing portions of their questionnaire or where Commerce retained rejected documents on the record). 20 See Commerce’s Letter, “Countervailing Duty Investigation of Silicon Metal from the Republic of Kazakhstan,” dated November 19, 2020 (Second Rejection Letter). 21 See Petitioners’ Letter, “Silicon Metal from Kazakhstan: Petitioners’ Pre-Preliminary Comments,” dated November 6, 2020; and TKS/TKT’s Submission, “TKT Comments On The Investigation,” dated November 23, 2020. 22 See GOK’s Letter, “Countervailing Duty Additional Questionnaire Response,” dated November 17, 2020 (GOK Supplemental Questionnaire Response).

3 IV. INJURY TEST

Because Kazakhstan is a “Subsidies Agreement Country” within the meaning of section 701(b) of the Act, the U.S. International Trade Commission (ITC) is required to determine whether imports of the subject merchandise from Kazakhstan materially injure, or threaten material injury to, a U.S. industry. On August 20, 2020, the ITC published its preliminary determination finding that there was a reasonable indication that an industry in the United States is materially injured by reason of imports of silicon metal from Kazakhstan that are alleged to be subsidized by the GOK.23

V. ALIGNMENT

In accordance with section 705(a)(1) of the Act and 19 CFR 351.210(b)(4), and based on the petitioners’ request, we are aligning the final CVD determination in this investigation with the final determinations in the concurrent AD investigations of silicon metal from Bosnia and Herzegovina, and Iceland.24 Consequently, the final CVD determination will be issued on the same date as the final AD determinations, which are currently scheduled to be issued no later than February 22, 2021, unless postponed.

VI. USE OF FACTS OTHERWISE AVAILABLE AND ADVERSE INFERENCES

Section 776(a) of the Act provides that Commerce shall, subject to section 782(d) of the Act, apply “facts otherwise available” if necessary information is not on the record or an interested party or any other person: (A) withholds information that has been requested; (B) fails to provide information within the deadlines established, or in the form and manner requested by Commerce, subject to subsections (c)(1) and (e) of section 782 of the Act; (C) significantly impedes a proceeding; or (D) provides information that cannot be verified as provided by section 782(i) of the Act.

Section 776(b) of the Act further provides that Commerce may use an adverse inference in selecting from among the facts otherwise available when a party fails to cooperate by not acting to the best of its ability to comply with a request for information. In so doing, Commerce is not required to determine, or make any adjustments to, a countervailable subsidy rate based on any assumptions about information an interested party would have provided if the interested party had complied with the request for information.25 Further, section 776(b)(2) of the Act states that an adverse inference may include reliance on information derived from the petition, the final

23 See Silicon Metal from Bosnia and Herzegovina, Iceland, Kazakhstan, and Malaysia, 85 FR 51491 (August 20, 2020). 24 See Petitioners’ Letter, “Silicon Metal from Kazakhstan: Petitioners’ Request for Alignment of Countervailing Duty Investigation Final Determination Deadline with Antidumping Duty Final Determination Deadlines in Silicon Metal from Bosnia and Herzegovina and Silicon Metal from Iceland,” dated October 30, 2020. These AD investigations were initiated at the same time as this CVD investigation. In addition, the AD investigations and this CVD investigation cover the same classes or kinds of merchandise. See Initiation Notice; see also Silicon Metal from Bosnia and Herzegovina, Iceland, and Malaysia: Initiation of Less-Than-Fair-Value Investigations, 85 FR 45177 (July 27, 2020). 25 See section 776(b)(1)(B) of the Act.

4 determination from the investigation, a previous administrative review, or other information placed on the record.

Under section 776(d) of the Act, Commerce may use any countervailable subsidy rate applied for the same or similar program in a CVD proceeding involving the same country, or, if there is no same or similar program, use a CVD rate for a subsidy program from a proceeding that the administering authority considers reasonable to use, including the highest of such rates. When selecting an adverse facts available (AFA) rate from among the possible sources of information, Commerce’s practice is to ensure that the rate is sufficiently adverse “as to effectuate the statutory purposes of the adverse facts available rule to induce respondents to provide Commerce with complete and accurate information in a timely manner.”26 Commerce’s practice also ensures “that the party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully.”27

For purposes of this preliminary determination, we are applying AFA as outlined below:

A. Application of Total AFA: TKS/TKT

TKS/TKT reported having the following cross-owned affiliated companies in the Affiliation Response and Affiliation Supplemental Response, and it stated that would provide full responses to the Initial Questionnaire for them:28

 TKS is the parent company of TKT;  Silicon Metal LLP (Silicon Metal) is an input provider;  “Ekibastuz GRES-2 station” JSC (GRES-2) and JSC KEGOC (KEGOC) provided electricity to TKT during the POI.

In addition, in the Affiliation Second Supplemental Response, TKS/TKT explained that KazSilicon, which had produced silicon metal during the average useful life (AUL) period, was wholly owned by JSC National Atomic Company Kazatomprom (Kazatomprom),29 the controlling shareholder of which during the POI was National Welfare Fund “Samruk-Kazyna” JSC (Samruk-Kazyna).30 TKS/TKT identified Samruk-Kazyna in turn as the sole shareholder of TKS.31 As such, Commerce requested that TKS/TKT provide a full questionnaire response on behalf of KazSilicon, which TKS/TKT provided.

26 See, e.g., Drill Pipe from the People’s Republic of China: Final Affirmative Countervailing Duty Determination, Final Affirmative Critical Circumstances Determination, 76 FR 1971 (January 11, 2011); see also Notice of Final Determination of Sales at Less Than Fair Value: Static Random Access Memory Semiconductors from Taiwan, 63 FR 8909, 8932 (February 23, 1998). 27 See Statement of Administrative Action accompanying the Uruguay Round Agreements Act, H.R. Doc. 103-316, vol. I (1994) (SAA) at 870. 28 See Affiliation Response at 1-9; see also Affiliation Supplemental Response at 1. 29 See Affiliation Second Supplemental Response at 2. 30 See KazSilicon Questionnaire Response at Attachment III-K-5, page 149. 31 See Affiliation Response at 2.

5 As described above, the questionnaire responses for TKS/TKT and all of its affiliates, other than KazSilicon, were to be submitted to Commerce by September 15, 2020.32 The response for KazSilicon was due on September 25, 2020.33 Ultimately, the responses for TKT, TKS, Samruk-Kazyna, Silicon Metal, GRES-2, and KEGOC were rejected as untimely,34 leaving TKS/TKT’s response on behalf of KazSilicon the only full response to the Initial Questionnaire on the record.

Full questionnaire responses from TKT, TKS, Samruk-Kazyna, Silicon Metal, GRES-2, and KEGOC are necessary to determine the degree to which these companies were provided countervailable subsidies under section 771(5) of the Act that may be attributed to TKS/TKT in accordance with 19 CFR 351.525(b). TKS/TKT’s failure to provide the requested information in a timely manner means that necessary information is not available on the record, and TKS/TKT has significantly impeded this proceeding. We, therefore, preliminarily determine that the application of facts otherwise available is warranted under sections 776(a)(1) and (2)(B)-(C) of the Act. Moreover, we preliminarily determine that TKS/TKT failed to cooperate by not acting to the best of its ability to comply with a request for information, and that adverse inferences are therefore warranted under section 776(b) of the Act to determine whether TKS/TKT received a benefit, and the amount of that benefit, for each program under investigation.35

B. Cross-Ownership

While information provided in the Affiliation Response and the subsequent supplemental responses allows us to find cross-ownership among TKT, TKS, Samruk-Kazyna, Silicon Metal, and KazSilicon, as discussed in further detail below, in the Affiliation Response, TKS/TKT also identified two companies, JSC “Samruk-Energy” (Samruk-Energy) and KEGOC, as being involved in the production or transmission of electricity, an input used in the production of silicon metal. In the Affiliation Supplemental Response, TKS/TKT identified Samruk-Energy’s subsidiary, GRES-2, and KEGOC as providers of electricity to TKT during the POI, and indicated that it would provide full questionnaire responses on behalf of GRES-2 and KEGOC.36 These responses were ultimately rejected as untimely.37 While the Affiliation Response and Affiliation Supplemental Response identify GRES-2 and KEGOC as affiliates of TKS/TKT via common ownership with Samruk-Kazyna, the degree to which the companies are cross-owned with TKS/TKT is uncertain, due to the failure of TKS/TKT to submit timely questionnaire responses on behalf of these companies. Due to the lack of information on the record necessary to make separate cross-ownership findings with respect to GRES-2 and KEGOC, and because TKS/TKT failed to provide this information in a timely manner, we find that the application of

32 See Memorandum, “Silicon Metal from the Republic of Kazakhstan: Extension of Time to Submit Initial Section III Questionnaire Response and KazSilicon Questionnaire Response,” dated September 9, 2020. 33 Id. 34 See Rejection Letter; see also Rejection Memorandum and Second Rejection Letter. 35 See Nippon Steel Corp. v. United States, 337 F.3d 1373, 1382 (Fed. Cir. 2003) (“Compliance with the ‘best of its ability’ standard is determined by assessing whether respondent has put forth its maximum effort to provide Commerce with full and complete answers to all inquiries in an investigation. While the standard does not require perfection and recognizes that mistakes sometimes occur, it does not condone inattentiveness, carelessness, or inadequate record keeping”). 36 See Affiliation Supplemental Response at 1-2. 37 See Rejection Letter; see also Rejection Memorandum and Second Rejection Letter.

6 facts available is warranted under sections 776(a)(1) and (2)(B)-(C) of the Act. Moreover, because TKS/TKT failed to cooperate by not acting to the best of its ability to comply with a request for information, we find that an adverse inference is warranted, under section 776(b) of the Act, in finding that GRES-2 and KEGOC are cross-owned with TKS/TKT within the meaning of 19 CFR 351.525(b)(6)(vi).

C. Selection of the Adverse Facts Available Rate

In deciding which facts to use as AFA, section 776(b) of the Act and 19 CFR 351.308(c)(1) authorize Commerce to rely on information derived from: (1) the petition; (2) a final determination in the investigation; (3) any previous review or determination; or (4) any information placed on the record. Commerce’s practice when selecting an adverse rate from among the possible sources of information is to ensure that the result is sufficiently adverse “so as to effectuate the statutory purposes of the AFA rule to induce respondents to provide {Commerce} with complete and accurate information in a timely manner.”38 Commerce’s practice also ensures “that the party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully.”39

In this preliminary determination, Commerce is examining all programs at issue in this investigation. Because TKS/TKT failed to act to the best of its ability in complying with a request for information, as discussed above, we find that adverse inferences are warranted to ensure that TKS/TKT does not obtain a more favorable result than if it had fully complied by providing a timely response to our request for information.

When selecting AFA rates in a CVD investigation, section 776(d) of the Act provides that Commerce may use any countervailable subsidy rate applied for the same or similar program in a CVD proceeding involving the same country, or, if there is no same or similar program, use a CVD rate for a subsidy program from a proceeding that the administering authority considers reasonable to use, including the highest of such rates.40 When selecting an AFA rate in an investigation, we first determine if there is an identical program in the investigation with a rate above-de minimis, or if not in the investigation, in previous cases from the same country, and we apply the highest calculated rate for the identical program.41 If there is no identical program, we then determine if there is a similar/comparable program (based on treatment of the benefit) in any proceeding from that country and apply the highest calculated rate for a similar/comparable

38 See, e.g., Certain Frozen Warmwater Shrimp from Ecuador: Final Affirmative Countervailing Duty Determination, 78 FR 50389, and accompanying Issues and Decision Memorandum (IDM) at Section IV, “Use of Facts Otherwise Available and Adverse Inferences” (August 19, 2013). 39 See SAA at 870. 40 See also, e.g., Laminated Woven Sacks from the People’s Republic of China: Final Affirmative Countervailing Duty Determination and Final Affirmative Determination, in Part, of Critical Circumstances, 73 FR 35639 (June 24, 2008), and accompanying IDM at “Selection of the Adverse Facts Available;” Aluminum Extrusions from the People’s Republic of China: Final Affirmative Countervailing Duty Determination, 76 FR 18521 (April 4, 2011) (Aluminum Extrusions from China), and accompanying IDM at “Application of Adverse Inferences: Non- Cooperative Companies;” and Galvanized Steel Wire from the People’s Republic of China: Final Affirmative Countervailing Duty Determination, 77 FR 17418 (March 26, 2012), and accompanying IDM at “Use of Facts Otherwise Available and Adverse Inferences.” 41 See, e.g., Aluminum Extrusions from the People’s Republic of China: Final Results of Countervailing Duty Administrative Review; 2010 and 2011, 79 FR 106 (January 2, 2014), and accompanying IDM at 8-9.

7 program.42 Where there is no comparable program, we apply the highest calculated above-de- minimis rate from any non-company-specific program in a CVD case involving the same country that the company’s industry could conceivably use.43

The current proceeding is the second CVD investigation involving Kazakhstan. In the previous investigation, we examined a subset of the programs being investigated in the instant investigation, and we based the final ad valorem subsidy rate entirely on AFA.44 Therefore, we do not have any previously calculated rates for identical or similar programs in Kazakhstan to apply as AFA for any of the alleged subsidy programs. However, as in the previous investigation, we are able to calculate an AFA rate for the exemption from Corporate Income Tax Exemption program for companies located in a special economic zone (SEZ).45 Specifically, the GOK reported that the standard income tax rate for corporations in Kazakhstan in effect during the POI was 20 percent of taxable income46 and, consistent with our practice, we applied an adverse inference that TKS/TKT and its cross-owned companies paid no income tax during the POI because of its income tax exemption.47 Given the information on the record, the highest benefit TKS/TKT could have received from the Corporate Income Tax Exemption program in Kazakhstan is 20 percent.48 There is no other factual information on the record which contradicts this conclusion. Accordingly, we are preliminarily applying 20 percent as the AFA rate for this program.

For each of the remaining alleged subsidy programs for which information was requested in the Initial Questionnaire, we are following our AFA hierarchy, and applying the highest above-de minimis rate used for any non-company specific program in a CVD case involving the same country that the company’s industry could conceivably use, and for which we preliminarily found that there is a financial contribution and that the benefit was specific. Accordingly, we are preliminarily applying, as AFA, the highest above-de minimis rate we have for any subsidy program involving Kazakhstan: the 20 percent AFA rate for the Corporate Income Tax Exemption program for companies located in an SEZ.

Accordingly, we preliminarily determine the AFA countervailable subsidy rate for TKS/TKT to be 120.00 percent ad valorem.49 The Appendix contains a chart summarizing our calculation of this rate.

42 Id. 43 See Certain Frozen Warmwater Shrimp from the People’s Republic of China: Final Affirmative Countervailing Duty Determination, 78 FR 50391 (August 19, 2013), and accompanying IDM at 13-14. 44 See Silicon Metal from the Republic of Kazakhstan: Final Affirmative Countervailing Duty Determination, 83 FR 9831 (March 8, 2018), and accompanying IDM. 45 Id. at 7-8. 46 See GOK Initial Questionnaire Response at 6. 47 See, e.g., Welded Line Pipe from the Republic of Turkey: Final Affirmative Countervailing Duty Determination, 80 FR 61371 (October 13, 2015), and accompanying IDM at 5; and Aluminum Extrusions from China IDM at “Application of Adverse Inferences: Non-Cooperative Companies.” 48 See GOK Initial Questionnaire Response at Exhibit CITe1. 49 See Appendix.

8 D. Corroboration of AFA Rate

Section 776(c)(1) of the Act provides that, when Commerce relies on secondary information, rather than on information obtained in the course of an investigation or review, it shall, to the extent practicable, corroborate that information from independent sources that are reasonably at its disposal. Here, we are only using information obtained during the course of this investigation from the GOK to determine the subsidy rates. Because this constitutes primary information, i.e., “information obtained in the course of an investigation,” we do not need to corroborate this information.50

VII. SUBSIDIES VALUATION

A. Allocation Period

Commerce normally allocates the benefits from non-recurring subsidies over the AUL period of renewable physical assets used in the production of subject merchandise. Commerce finds the AUL period in this proceeding to be 14 years, pursuant to 19 CFR 351.524(d)(2) and the U.S. Internal Revenue Service’s 1977 Class Life Asset Depreciation Range System. Commerce notified the respondents of the AUL period in the Initial Questionnaire and requested data accordingly. No party in this proceeding disputed this allocation period.

B. Attribution of Subsidies

In accordance with 19 CFR 351.525(b)(6)(i), Commerce normally attributes a subsidy to the products produced by the company that received the subsidy. However, 19 CFR 351.525(b)(6)(ii)-(v) provide additional rules for the attribution of subsidies received by respondents with cross-owned affiliates. Subsidies to the following types of cross-owned affiliates are covered in these additional attribution rules: (ii) producers of the subject merchandise; (iii) holding companies or parent companies; (iv) producers of an input that is primarily dedicated to the production of the downstream product; or (v) an affiliate producing non-subject merchandise that otherwise transfers a subsidy to a respondent.

According to 19 CFR 351.525(b)(6)(vi), cross-ownership exists between two or more corporations where one corporation can use or direct the individual assets of the other corporation(s) in essentially the same ways it can use its own assets. This section of Commerce’s regulations states that this standard will normally be met where there is a majority voting ownership interest between two corporations or through common ownership of two (or more) corporations. The CVD Preamble to Commerce’s regulations further clarifies Commerce’s cross-ownership standard.51 According to the CVD Preamble, relationships captured by the cross-ownership definition include those where:

{T}he interests of two corporations have merged to such a degree that one corporation can use or direct the individual assets (or subsidy benefits) of the other corporation in essentially the same way it can use its own assets (or subsidy benefits)... Cross-ownership

50 See section 776(c) of the Act. 51 See Countervailing Duties; Final Rule, 63 FR 65348 (November 25, 1998) (CVD Preamble).

9 does not require one corporation to own 100 percent of the other corporation. Normally, cross-ownership will exist where there is a majority voting ownership interest between two corporations or through common ownership of two (or more) corporations. In certain circumstances, a large minority voting interest (for example, 40 percent) or a “golden share” may also result in cross-ownership.52

Thus, Commerce’s regulations make clear that the agency must look at the facts presented in each case in determining whether cross-ownership exists.

The U.S. Court of International Trade has upheld Commerce’s authority to attribute subsidies based on whether a company could use or direct the subsidy benefits of another company in essentially the same way it could use its own subsidy benefits.53

We preliminarily determine that TKT, TKS, Samruk-Kazyna, Silicon Metal, GRES-2, KEGOC, and KazSilicon are cross-owned within the meaning of 19 CFR 351.525(b)(6)(vi) through TKS’s common ownership and control of TKT and Silicon Mining. In the Affiliation Response, TKT identified both itself and Silicon Metal as wholly-owned subsidiaries of TKS,54 which was in turn a wholly-owned subsidiary of Samruk-Kazyna.55 Commerce’s regulations state that companies are cross-owned where one company could use or direct the assets of another as it would its own and that this standard “will normally be met where there is a majority voting ownership interest between two corporations or through common ownership of two (or more) corporations.”56 TKT and Silicon Metal meet this standard through their common ownership by TKS, and in turn, Samruk-Kazyna.

In the Affiliation Second Supplemental Response, TKS/TKT explained that KazSilicon and TKT “are two fully separate, independent companies” that share no management or assets, but confirmed that KazSilicon’s sole shareholder was Kazatomprom.57 Kazatomprom, as noted above, is wholly owned by Samruk-Kazyna, which in turns wholly owns TKS, and in turn, TKT. TKS/TKT explained that KazSilicon was, prior to the POI, a producer of silicon metal, but that it had not produced subject merchandise since 2015.58 Samruk-Kazyna’s ultimate ownership of both TKT and KazSilicon leaves no doubt that “the interests of two corporations have merged,” as their ownership is identical.59 Therefore, because Samruk-Kazyna is the ultimate owner of both TKT and KazSilicon, we preliminarily determine that these companies are cross-owned pursuant to 19 CFR 351.525(b)(6)(vi). Moreover, as explained in the “Use of Facts Otherwise Available and Adverse Inferences” section, we are also preliminarily finding GRES-2 and KEGOC, as providers of electricity to TKT during the POI, to be cross-owned with TKS/TKT within the meaning of 19 CFR 351.525(b)(6)(vi) based on AFA.

52 Id., 63 FR at 65401. 53 See Fabrique de Fer de Charleroi, SA v. United States, 166 F. Supp. 2d 593, 600-604 (CIT 2001). 54 See Affiliation Response at 3-4. 55 Id. at 5. 56 19 CFR 351.525(b)(6)(vi). 57 See Affiliation Second Supplemental Response at 2. 58 Id. 59 See CVD Preamble, 63 FR at 65401.

10 VIII. ANALYSIS OF PROGRAMS

Based upon our analysis and the responses to our questionnaires, we preliminarily determine the following:

A. Programs Preliminarily Found to be Countervailable

1. Corporate Income Tax Exemption

The GOK explained that under Article 709 of the Code of the Republic of Kazakhstan on Taxes (Tax Code), effective January 1, 2013, members of an SEZ may be provided a 100 percent reduction in calculated corporate income tax,60 which is equal to 20 percent of taxable income.61 Paragraph 1 of Article 709 of the Tax Code states that, “{w}hen determining the amount of corporate income tax payable to the state budget, an organization operating in the territory of {an SEZ} shall reduce the amount of corporate income tax, calculated in accordance with Article 302 of this Code, by 100 percent on income received from the sale of goods, works, services that are the result of implementation of priority activities.”62 The GOK further explained that, in order to receive tax reductions under this program, recipients must be a member of an SEZ, registered as a taxpayer with the state revenue authority in the territory of the SEZ, and accomplish a priority activity.63 Priority activities within the Saryarka SEZ include metallurgy and heavy engineering.64 The GOK confirmed that some of the tax programs available to companies located in the Saryarka SEZ were utilized by TKS/TKT, confirming that the company was located in the zone and, therefore, eligible to use this program.65 Companies located in an SEZ submit their tax declaration to regional tax authorities of the State Revenue Department of the Ministry of Finance.66

We preliminarily determine that tax benefits provided by this program provide a financial contribution in the form of revenue forgone by the government under section 771(5)(D)(ii) of the Act. Because the program is limited to companies located in SEZs, we preliminarily determine that the income tax reductions under this program are regionally specific under section 771(5A)(D)(iv) of the Act, because the subsidy is limited to an enterprise or industry located within a designated geographical region within the jurisdiction of the authority providing the subsidy. We also preliminarily determine that this program is de jure specific under section 771(5A) of the Act because it is limited by law to companies engaging in priority activities, including metallurgy. In accordance with our AFA finding, described above, we find that TKS/TKT used and benefited from the Corporate Income Tax Exemption program. On this basis, we preliminarily determine that TKS/TKT received a countervailable subsidy rate of 20 percent ad valorem.

60 See GOK Initial Questionnaire Response at 3. 61 Id. at 6. 62 Id. at Annex CITe1. 63 Id. at 6. 64 See GOK Supplemental Questionnaire Response at 1. 65 See, e.g., GOK Initial Questionnaire Response at 11. 66 See GOK Supplemental Questionnaire Response at 3.

11 2. Property Tax Exemption

The GOK explained that under paragraph 1 of Article 709 of the Tax Code, effective January 1, 2013, members of SEZs may be provided a 100 percent reduction in calculated property tax,67 which is equal to 1.5 percent of the tax base.68 Paragraph 1 of Article 709 of the Tax Code states that, “{w}hen determining the amount of land tax, property tax and fee for the use of land plots to be paid to the budget, an organization or an individual entrepreneur operating in the territory of a special economic zone reduces the amount of the calculated tax and (or) the fee by 100 percent with regard to taxable items (items subject to the fee) located in the territory of a special economic zone and used in the implementation of priority activities.”69 The GOK further explained that, in order to receive tax reductions under this program, recipients must be a member of an SEZ, registered as a taxpayer with the state revenue authority in the territory of the SEZ, and accomplish a priority activity.70 Priority activities within the Saryarka SEZ include metallurgy and heavy engineering.71 Companies located in an SEZ submit their tax declaration to regional tax authorities of the State Revenue Department of the Ministry of Finance.72

We preliminarily determine that property tax exemptions provided by this program provide a financial contribution in the form of revenue forgone by the government under section 771(5)(D)(ii) of the Act. Because the program is limited to companies located in SEZs, we preliminarily determine that the property tax exemptions under this program are regionally specific under section 771(5A)(D)(iv) of the Act, because the subsidy is limited to an enterprise or industry located within a designated geographical region within the jurisdiction of the authority providing the subsidy. We also preliminarily determine that this program is de jure specific under section 771(5A) of the Act because it is limited by law to companies engaging in priority activities, including metallurgy. The GOK confirmed that some of the tax programs available to companies located in the Saryarka SEZ were utilized by TKS/TKT, confirming that the company was located in the zone and, therefore, eligible to use this program.73 In accordance with our AFA finding, described above, we find that TKS/TKT used and benefited from the Property Tax Exemption program. On this basis, we preliminarily determine that TKT received a countervailable subsidy rate of 20 percent ad valorem.

3. Land Tax and Land Use Fee Exemption

The GOK explained that under paragraph 1 of Article 709 of the Tax Code, effective January 1, 2013, members of SEZs may be provided a 100 percent reduction in calculated land tax.74 The base tax rate for land in the Karaganda region, where the Saryarka SEZ is located, is established by Article 505 of the Tax Code as 9.65 tenge per square meter.75 Paragraph 1 of Article 709 of the Tax Code states that, “{w}hen determining the amount of land tax, property tax and fee for

67 See GOK Initial Questionnaire Response at 10. 68 Id. at 13. 69 Id. at Annex CITe1. 70 Id. at 13. 71 See GOK Supplemental Questionnaire Response at 1. 72 See GOK Initial Questionnaire Response at 10. 73 Id. at 11. 74 Id. at 17. 75 See GOK Supplemental Questionnaire Response at 2; see also id. at Annex CITe1.

12 the use of land plots to be paid to the budget, an organization or an individual entrepreneur operating in the territory of a special economic zone reduces the amount of the calculated tax and (or) the fee by 100 percent with regard to taxable items (items subject to the fee) located in the territory of {an SEZ} and used in the implementation of priority activities.”76 The GOK further explained that, in order to receive tax reductions under this program, recipients must be a member of an SEZ, registered as a taxpayer with the state revenue authority in the territory of the SEZ, and accomplish a priority activity.77 Priority activities within the Saryarka SEZ include metallurgy and heavy engineering.78 The GOK confirmed that some of the tax programs available to companies located in the Saryarka SEZ were utilized by TKS/TKT, confirming that the company was located in the zone and, therefore, eligible to use this program.79 Companies located in an SEZ submit their tax declaration to regional tax authorities of the State Revenue Department of the Ministry of Finance.80

We preliminarily determine that exemptions from land taxes and land use fees provide a financial contribution in the form of revenue forgone by the government under section 771(5)(D)(ii) of the Act. Furthermore, because the program is limited to companies located in SEZs, we preliminarily determine that the land tax and land use fee exemptions under this program are regionally specific under section 771(5A)(D)(iv) of the Act, because the subsidy is limited to an enterprise or industry located within a designated geographical region within the jurisdiction of the authority providing the subsidy. We also preliminarily determine that this program is de jure specific under section 771(5A) of the Act because it is limited by law to companies engaging in priority activities, including metallurgy. In accordance with our AFA finding, described above, we find that TKT used the Land Tax and Land Use Fee Exemption program, and was, therefore, completely exempt from paying land tax or land use fees during the POI. Although the GOK provided information indicating that standard rate of 9.65 tenge per square meter applied to companies in Karaganda, we have no information from TKT regarding how much land it owned in the Saryarka SEZ. Therefore, we preliminarily determine that TKS/TKT received a countervailable subsidy rate of 20 percent ad valorem, as discussed in the “Selection of the Adverse Facts Available Rate” section, above.

4. Customs Duty Exemption

The GOK explained that under paragraph 1 of Article 281 of the Code of the Republic of Kazakhstan “On Customs Regulation in the Republic of Kazakhstan” (Customs Regulation), effective December 26, 2017, companies located in SEZs may defer the payment of customs duties for goods imported into the zone until such time as the goods are exported to the territory of Kazakhstan or exported to other countries.81 The GOK further clarified that there is no exemption of customs duties under this program, and that such duties are merely deferred until such a time as the goods are exported to the territory of Kazakhstan or exported to other countries.82 Article 281 of the Customs Regulation indicates that this program is limited to

76 See GOK Initial Questionnaire Response at Annex CITe1. 77 Id. at 20. 78 See GOK Supplemental Questionnaire Response at 1. 79 See GOK Initial Questionnaire Response at 18. 80 Id. at 17. 81 Id. at 24. 82 Id.

13 companies located in SEZs.83 As noted above, the GOK has confirmed that TKS/TKS is located in the Saryarka SEZ.84 The GOK identified the State Revenue Committee of the Ministry of Finance as the executive body responsible for administering this program.85

We preliminarily determine that Customs tax benefits provided by this program provide a financial contribution in the form of revenue forgone by the government under section 771(5)(D)(ii) of the Act. Furthermore, because the program is limited to companies located in SEZs, we preliminarily determine that the income tax reductions under this program are regionally specific under section 771(5A)(D)(iv) of the Act, because the subsidy is limited to an enterprise or industry located within a designated geographical region within the jurisdiction of the authority providing the subsidy. In accordance with our AFA finding, described above, we find that TKS/TKT used the Customs Duty Exemption program. Moreover, we preliminarily find, based on AFA, that TKS/TKT did not export goods to the customs territory of Kazakhstan or other countries, and that any customs duties owed on any goods imported into the SEZ are still deferred within the meaning of 19 CFR 351.510(a)(2). Normally, in accordance with 19 CFR 351.510(a)(2), a deferral of import charges will be treated as a government-provided loan in the amount of the taxes deferred, according to the methodology described in 19 CFR 351.505. In accordance with 19 CFR 351.510(a)(2) and19 CFR 351.505(d), we are treating these deferrals of customs duties as we would a contingent liability interest-free loan. Furthermore, we preliminarily determine, based on AFA, that the event upon which the repayment depends, i.e. the export of the goods from the SEZ, is not viable, and we are, therefore, treating the deferred customs duties as grants in accordance with 19 CFR 351.505(d)(2). On this basis, we have come full circle in treating the customs duty deferrals as exemptions within the meaning of 19 CFR 351.510(a)(1). Therefore, as described in the “Selection of the Adverse Facts Available Rate” section, above, we preliminarily determine that for the Customs Duty Exemption program TKS/TKT received a countervailable subsidy of 20 percent ad valorem.

5. Provision of Electricity for Less than Adequate Remuneration (LTAR)

In its initial questionnaire response, the GOK provided an overview of the electricity industry and market in Kazakhstan. The GOK explained that the power supply system in Kazakhstan includes electrical energy production, transmission, and supplying organizations and consumers with energy.86 The GOK explained that electricity tariffs are calculated using the cost method, and prices to end users consist of: (1) the price (tariff) for electricity of the electrical energy producing organizations; (2) the tariff for electrical energy transfer; and (3) extra charge for supply.87 Electricity tariffs within Kazakhstan for the sale of electricity by electrical energy producing organizations are approved by the Ministry of Energy of the Republic of Kazakhstan.88 Prices are also governed by the contractual relationship between electrical energy producing companies and consumers.89 Although “energy producing organizations” are responsible for setting their own selling prices, Article 12-1 of the Law on the Republic of

83 Id. at Annex IDe1. 84 Id. at 11, 18. 85 Id. at 25. 86 Id. at 32. 87 Id. 88 Id. at 32. 89 Id.

14 Kazakhstan “On the Electric Industry” (Electric Industry Law) states that energy producers may not set selling prices higher than the marginal tariff for electrical energy.90 Marginal tariff rates, in turn, are approved by the GOK under paragraph 70-1 of Article 5 of the Electric Industry Law91 and set out for the POI in Order of the Minister of Energy of the Republic of Kazakhstan No. 514, “On Approval of Maximum Tariffs for Electricity.”92 Transmission tariffs are set by the Natural Monopolies Regulatory Committee in accordance with the Natural Monopolies Law.93 The supply of electricity within the interregional system is provided by regional transmitting companies,94 and according to the Electric Industry Law, TKS/TKT’s affiliate KEGOC is the system operator of the entire trunk cabling system in Kazakhstan for interregional electric power transmission.95 In the case of the Saryarka SEZ, where TKT is located, “Managing company of the Saryarka special economic zone” JSC (MC SEZ Saryarka) is registered in the state register of natural monopoly entities in the Karaganda region for the provision of services for the transmission of electrical energy.96 The GOK described an energy transmission organization as one that provides, on a contract basis, a service for the transmission of electricity under Article 1 of the Electric Industry Law.97

The GOK identified the ultimate owner of MC SEZ Saryarka as a government institution, although the exact name of this entity is business proprietary information.98 Paragraph 16 of Article 4 and paragraph 3 of Article 5 of the Natural Monopolies Law indicates that electricity transmission is within the sphere of regulated services that are subject to the law. Article 8 of the Natural Monopolies Law indicates that the GOK has the authority to “develop and approve the tariff setting rules” and to “develop and approve the standard contracts for provision of regulated services.”99 Given the ownership and monopolistic status of MC SEZ Saryarka, the company’s role in transmitting electricity to companies in the Saryarka SEZ, and the GOK’s role in establishing electricity transmission tariffs and subsequent purchase contracts, Commerce preliminarily determines that the provision of electricity for LTAR constitutes a financial contribution in the form of the provision of a good or services under section 771(D)(iii) of the Act and 19 CFR 351.511. The GOK identified the metallurgical industry, which includes the production of silicon metal, as having consumed 26.6 percent of electricity supplied in Kazakhstan during the POI.100 The GOK also provided a list of the 14 largest industries consuming electricity during the POI, the largest of which is the “manufacturing industry,” which accounted for 35.77 percent of electricity consumption during the POI.101 The next largest industry, “transport and storage,” accounted for only 3.32 percent of electricity consumption during the POI. Based on our reading of the facts provided by the GOK, we consider the metallurgical industry to be part of the manufacturing industry. Based on the amount of

90 Id. at Annex LTARe1_1. 91 Id. 92 Id. at Annex LTARe1_13. 93 Id. 94 Id. 95 Id. 96 Id. at 35. 97 See GOK Supplemental Questionnaire Response at 3. 98 Id. at 3-4 and Annex 9. 99 See GOK Initial Questionnaire Response at Annex LTARe1_16. 100 Id. at 49. 101 Id. at Annex LTARe21.

15 electricity consumed by the metallurgical industry vis-à-vis the electricity consumption of the 13 other largest industries during the POI, we preliminarily determine that the metallurgical industry is a disproportionate user of electricity in Kazakhstan and that the provision of electricity for LTAR is therefore de facto specific under section 771(5A)(D)(iii)(III) of the Act. Based on our AFA finding, described above, we find that TKS/TKT benefited from the provision of electricity at LTAR. On this basis, we preliminarily determine that TKT received a countervailable subsidy rate of 20 percent ad valorem.

6. Debt Forgiveness

As discussed in the CVD Initiation Checklist, the petitioners allege that TKT and/or its predecessor Silicium Kazakhstan LLP (Silicium Kazakhstan) received subsidies from the state-owned Investment Fund of Kazakhstan (IKF) in the form of debt forgiveness. In the Petition, the petitioners claimed that Silicium Kazakhstan was established in 2008 and that a major portion of the company’s financing came from two state-owned banks, the Development Bank of Kazakhstan (DBK) and the BTA Bank.102 The petitioners further alleged that Silicium Kazakhstan defaulted on its debts owed to the DBK, and that in 2012 Silicium Kazakhstan was ordered to pay its debt to the DBK, which then sold the debt to the IFK, a state-owned asset manager charged with managing and restructuring distressed assets.103 The petitioners alleged that the IFK seized Silicium Kazakhstan’s assets (i.e., the silicon metal plant) as repayment for part of its debt, and that in 2012, the IFK used the assets it acquired from Silicium Kazakhstan to form a new entity, Kremnyi Kazakhstan. Kremnyi Kazakhstan was in turn purchased by TKT in 2015 and merged with the company in 2016.104 The petitioners further claimed that Silicium Kazakhstan continued to exist as a separate entity and was obligated to pay its debt to the IFK, but has since filed for bankruptcy.105 Therefore, the petitioners claimed that TKT was provided a subsidy in the form of debt forgiveness, as its assets and debt were transferred to a state-owned company charged with restructuring debts.

The GOK denies that any such program exists.106 However, much of the information provided by the GOK comports with the petitioners’ original allegation. First, the GOK confirmed that it is the ultimate owner of the IFK, as discussed in further detail below. The GOK also confirmed that Silicium Kazakhstan was in debt to the DBK, and that this debt was assigned to the IFK in 2013.107 Between 2013 and 2015, as partial repayment of the outstanding debt, the IFK acquired assets from Silicium Kazakhstan, including the company’s silicon metal production plant.108 In 2014, in order to further consolidate the balance of the debt, the IFK created a separate subsidiary, Kremnyi Kazakhstan, which held various former assets of Silicium Kazakhstan, including the silicon metal production plant.109 The GOK then describes TKS’s acquisition of Kremnyi Kazakhstan in 2015,110 as well as TKS’s merger of Kremnyi Kazakhstan into its

102 See the Petition at 16. 103 Id. at 17. 104 Id. 105 Id. 106 See GOK Initial Questionnaire Response at 86. 107 Id. at 85. 108 Id. 109 Id. 110 Id.

16 subsidiary TKT in 2016, completing the transfer of Kremnyi Kazakhstan’s property and fixed assets.111 The GOK also described, “{i}n view of the presence of outstanding debts for monetary and tax liabilities, wages, as well as the lack of financial and economic activity,” the subsequent bankruptcy of Silicium Kazakhstan in 2017.112 The GOK noted that at the time of this bankruptcy, Silicium Kazakhstan remained indebted to the IFK.113 Furthermore, the GOK claims the IFK is continuing to pursue its collection of Silicium Kazakhstan’s debt, and that there was no forgiveness of the debt.114

As an initial matter, Commerce preliminarily determines that the IFK is an authority within the meaning of section 771(5)(B) of the Act. The statute defines “authority” as “a government of a country or any public entity within the territory of the country.”115 The IFK is ultimately controlled by the GOK, and “{t}he sole shareholder of the parent company of the {IFK} is the National Management Holding “Baiterek” JSC (the”Parent Company”). The Group’s ultimate controlling party is the Government of the Republic of Kazakhstan which has the authority to direct the Group’s operations at its own discretion and in its own interests.”116 Furthermore, the IFK “was established in the Republic of Kazakhstan as a Joint-Stock Company on 30 May 2003. The principal activity of the Fund is to assist in the realization of the Strategy of Industrial- Innovative Development of the Republic of Kazakhstan through investing in certain industries.”117 Therefore, because the IFK is ultimately wholly controlled by the GOK and was established to support the strategic development initiatives of Kazakhstan, we preliminarily determine that the IFK is an authority.

It is apparent from the information on the record that the assets of Silicium Kazakhstan, including its silicon metal production plant, were transferred, unencumbered by Silicium Kazakhstan’s debt to the IFK and then to Kremnyi Kazakhstan. TKS was in turn able to acquire the assets of Silicium Kazakhstan through its acquisition of Kremnyi Kazakhstan, unencumbered by the predecessor company’s debt. This severance of Silicium Kazakhstan’s debt from the assets transferred to Kremnyi Kazakhstan constitutes a form of debt forgiveness for Kremnyi Kazakhstan, which was subsequently acquired debt-free by TKS. As such, we preliminarily determine that this debt forgiveness, provided by a government authority, is a financial contribution pursuant to section 771(5)(D)(i) of the Act. Furthermore, we preliminarily find that this program is de facto specific pursuant to section 771(5A)(D)(iii)(1) of the Act because the actual recipient of the debt forgiveness is limited to a certain enterprise. Regarding the benefit received by TKS/TKT, in accordance with our AFA finding described above, we preliminarily determine that TKS/TKT received an ad valorem subsidy of 20 percent ad valorem.

111 Id. 112 Id. at 86. 113 Id. 114 Id.; see also GOK Supplemental Questionnaire Response at 14. 115 See section 771(5)(B) of the Act. 116 See GOK Initial Questionnaire Response at Exhibit DF2. 117 Id.

17 B. Programs Preliminarily Found to Not Provide a Countervailable Subsidy

1. Provision of Water for LTAR

In its initial response, the GOK explained that TKT does not purchase water supply services through the Saryarka SEZ, because infrastructure facilities are not connected to TKT’s production facility.118 The GOK also indicated that TKT’s water supply is provided by a private party whose identity is business proprietary information. Based on the information provided, Commerce preliminarily determines that the GOK and the Saryarka SEZ have no role in the provision of water to TKS/TKT, and that there is, therefore, no financial contribution within the meaning of section 771(5)(A) of the Act. As such, we preliminarily determine that this program did not provide a countervailable subsidy during the POI.

2. Provision of Drainage System Services for LTAR

In its initial questionnaire response, the GOK explained that drainage infrastructure was not extended to TKT’s production facility within the Saryarka SEZ, and that TKT carried out its own wastewater removal with its own sewage machine to specially designated places outside the SEZ.119 In its supplemental questionnaire response, the GOK clarified that a sewage treatment plant within the SEZ has yet to be commissioned, and that during the POI each company located within the Saryarka SEZ installed sedimentation tanks (i.e., septic tanks) on their own property and was responsible for pumping and transporting its own waste materials out of the SEZ.120 Given the GOK’s claim that there are no GOK-operated drainage system services within the Saryarka SEZ, and that, moreover, companies located within the SEZ are responsible for their own drainage system services, Commerce preliminarily determines that there is no financial contribution within the meaning of section 771(5)(A) of the Act, and that, as such, this program did not provide a countervailable subsidy during the POI.

IX. CALCULATION OF THE ALL-OTHERS RATE

Section 703(d)(l)(A)(i) of the Act states that Commerce shall determine an estimated individual countervailable subsidy rate for each exporter and producer individually investigated, and, in accordance with section 705(c)(5)(A)(i), determine a single estimated country-wide “all-others” rate, applicable to all exporters and producers not individually investigated and to new exporters and producers. Section 705(c)(5)(A)(i) of the Act states that the all-others rate shall be an amount equal to the weighted-average countervailable subsidy rates established for the exporters and producers that were individually investigated, excluding any rates that are zero or de minimis and/or any rate based entirely on facts available. Section 705(c)(5)(A)(ii) of the Act, however, provides that, if the countervailable subsidy rates established for all individually examined exporters/producers are zero, de minimis, or based entirely under section 776 of the Act, Commerce may use any reasonable method to establish an all-others rate for exporters/producers that were not individually-examined, including averaging the weighted-average countervailable subsidy rates determined for the individually-examined exporters and producers.

118 See GOK Initial Questionnaire Response at 55. 119 Id. at 70. 120 See GOK Supplemental Questionnaire Response at 10.

In this case, the countervailable subsidy rate calculated for TKS/TKT is based entirely on facts available pursuant to section 776 of the Act. Accordingly, we are using “any reasonable method” to establish the all-others rate. Specifically, we find that it is reasonable to rely on the rate established for TKS/TKT as the all-others rate, particularly because there is no other information on the record that can be used to determine an all-others rate. This method is consistent with Commerce’s practice.121

X. RECOMMENDATION

We recommend that you approve the preliminary findings described above.

☒ ☐ ______Agree Disagree

11/27/2020 X

Signed by: JEFFREY KESSLER Jeffrey I. Kessler Assistant Secretary for Enforcement and Compliance

121 See, e.g., Circular Welded Carbon-Quality Steel Pipe from Pakistan: Preliminary Affirmative Countervailing Duty Determination and Alignment of Final Countervailing Duty Determination with Final Antidumping Duty Determination, 81 FR 20619 (April 8, 2016), and accompanying Preliminary Determination Memorandum at 16-17, unchanged in Circular Welded Carbon-Quality Steel Pipe from Pakistan: Final Affirmative Countervailing Duty Determination, 81 FR 75045 (October 28, 2016) (assigning the sole mandatory respondent’s rate, which was based on AFA, as the all-others rate); Grain-Oriented Electrical Steel from the People’s Republic of China: Final Affirmative Countervailing Duty Determination, 79 FR 59221 (October 1, 2014), and accompanying IDM at Comment 1; Circular Welded Carbon-Quality Steel Pipe from India: Final Affirmative Countervailing Duty Determination, 77 FR 64468, 64470 (October 22, 2012) (averaging two total AFA respondents’ rates together to determine the all-others rate); and Certain Potassium Phosphate Salts from the People’s Republic of China: Final Affirmative Countervailing Duty Determination and Termination of Critical Circumstances Inquiry, 75 FR 30375 (June 1, 2010) (assigning the rate for three total AFA companies as the all-others rate).

19 APPENDIX

AFA Rate Calculation

Corporate Income Tax Exemption 20.00% Property Tax Exemption 20.00% Land Tax and Land Use Fee Exemption 20.00% Customs Duty Exemption 20.00% Provision of Electricity for LTAR 20.00% Debt Forgiveness 20.00% Total Ad Valorem Subsidy Rate: 120.00%